Westerfelt Shops issued 3,000 debentures on January 1,20X9.The debentures were 12-year,7% debt,which paid interest semi-annually,every June 30 and December 31.The face value of each debenture is $1,000.If the market rate of interest is 7% on January 1,20X9,what is the journal entry to record the payment of interest on June 30,20X9?
A)$\begin{array} { l l l }
\text { Eonds Payzble } & 105,000 & \
\text { Cash } & & 105,000 \
\end{array}$

B)$\begin{array}{lccc}
\text { Interest Payable } & 105,000 & \
\text { Cash } & & 105,000 \
\end{array}$

C)$\begin{array}{lccc}
\text { Cash } &210,000 & \
\quad \text { Eonds Payable } && 105,000 & \
\end{array}$

D)$\begin{array}{lccc}
\text { Interest Experse } & 105,000 \
\quad \text { Cash } & & 105,000 \
\end{array}$

E)$\begin{array}{lccc}
\text { Interest Expense } &210,000 & \
\text { Eonds Peyable } & &210,000
\end{array}$

Question

Westerfelt Shops issued 3,000 debentures on January 1,20X9.The debentures were 12-year,7% debt,which paid interest semi-annually,every June 30 and December 31.The face value of each debenture is $1,000.If the market rate of interest is 7% on January 1,20X9,what is the journal entry to record the payment of interest on June 30,20X9? 
A)$\begin{array} { l l l } 
\text {  Eonds Payzble } & 105,000 & \
\text { Cash } & & 105,000 \
\end{array}$

B)$\begin{array}{lccc}
\text {  Interest Payable } & 105,000 & \
\text { Cash } & & 105,000 \
\end{array}$

C)$\begin{array}{lccc}
\text {  Cash } &210,000 &  \
\quad \text { Eonds Payable } && 105,000 & \
\end{array}$

D)$\begin{array}{lccc}
\text {  Interest Experse } &  105,000 \
\quad \text { Cash } & & 105,000 \
\end{array}$

E)$\begin{array}{lccc}
\text {  Interest Expense } &210,000  &  \
\text { Eonds Peyable } & &210,000
\end{array}$

Quizplus · Accepted Answer

The interest payment is calculated as $3,000 \times \$1,000 \times 7\% \div 2 = \$105,000$. This is because interest is paid semi-annually, so the annual interest rate (7%) is divided by 2. The correct journal entry debits Interest Expense and credits Cash for the interest payment amount.

Westerfelt Shops Issued 3,000 Debentures on January 1,20X9 Eonds Payzble 105,000 Cash 105,000\begin{array} { l l l } \text { Eonds Payzble } & 105,000 & \\\text { Cash } & & 105,000 \\\end{array} Eonds Payzble Cash ​105,000​105,000​

Westerfelt Shops Issued 3,000 Debentures on January 1,20X9 $\begin{array} { l l l } \text { Eonds Payzble } & 105,000 & \\\text { Cash } & & 105,000 \\\end{array}$